Buy This Tata Group Stock for 38% Gains, Says Motilal Oswal

Reputed brokerage firm Motilal Oswal has suggested investors to buy the stocks of Titan Company. This large-cap company has reported considerably good results in the past fiscal. Titan reported an Rs. 288.0 b sales, Rs. 34.2 b EBITDA, and Rs. 23.3 b Adj. PAT in FY22.

Target Price

The Current Market Price (CMP) of Titan Company is Rs. 2091. Motilal Oswal has estimated a Target Price for the stock at Rs. 2900. The stock is expected to offer a 39% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 2091
Target Price	Rs. 2900
1 year return	39.00%

Comments by Motilal Oswal

Motilal Oswal stated, "Titan remains our top pick in the large-cap Consumption space in India, with strong earnings growth visibility and compounding ~20% for an elongated period of time. In the Jewelry industry, which is organizing at a rapid space, Titan is clearly at the vanguard among organized players in leading this growth. Its runway for growth is long, with a market share of just ~6%. Unlike other high growth categories, the competitive intensity from organized and unorganized peers in Jewelry is considerably weaker. Expensive valuations in the near term will get burnt off by a rapid pace of growth."

However, "given that the Jewelry business accounts for an overwhelming majority of Titan's consolidated business and is poised for strong growth, these new businesses are still likely to account for just 7-8% of sales put together, despite the strong growth targets mentioned above. Nevertheless, these businesses are adding growth engines for the future," the brokerage firm stated.

About the company

Titan Company Limited (Titan), is a joint venture between the Tata Group and the Tamil Nadu Industrial Development Corporation (TIDCO). The management is targeting 2.5x of FY22 sales (Rs. 232.7b) by FY27, that is, ~20% CAGR. It targets having over 600 Tanishq stores in 300 towns over the next three years (389 stores in March 2022). This is in line with a similar five-year target it had set in FY18 and is on course to achieve. Additionally, Titan is targeting to achieve Rs. 100b in sales in FY26 (~Rs. 70b/Rs. 30b for Watches/Wearables), with an 18% EBIT margin. The business posted sales of Rs. 23b, with an EBIT margin of 5.8% in FY22, which was a Covid-affected year. It is targeting 40%/50% revenue/EBIT growth in Titan Eye in FY23 (Rs. 550m sales in FY22). The management aims to reach 1,000 stores by March 2023 (from 760 stores in March 2022), with 25 Fastrack physical stores.

Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.